Vatican besieged by leaks, conspiracies

VATICAN CITY - Money laundering at the Vatican bank. Corruption in the awarding of Vatican contracts. Even a purported plot to kill Pope Benedict XVI.

The Vatican is being besieged by near-daily leaks of confidential documents and tabloid-style reports of alleged financial mismanagement, political infighting and gossip about who might be the next pope - all coming out at an exceedingly delicate time for the Holy See and Benedict himself.

The frescoed halls of the Apostolic Palace have been buzzing about the leaks, which have emerged as the pontiff prepares for the ceremony next week to crown 22 new cardinals - the princes of the church who will elect his successor.

Such ceremonies always breed unseemly speculation about a future pontiff since they provide a rare chance for cardinals new and old to size one another up. But the Feb. 18 consistory has taken on greater gravitas since the 84-year-old Benedict is showing signs of slowing down.

Conspiracy theorists reading the Italian media of late might also point to another looming date as reason for why the Vatican's dirty laundry is being aired now: In June, a European commission will decide whether the Holy See has abided by tough international anti-money laundering and anti-terror finance laws.

Compliance would mark a key step in the Vatican's goal of joining the so-called "white list" of countries that share financial information - a designation the Vatican hopes will forever dispense with its reputation as a scandal-plagued, secrecy-obsessed tax haven.

The flurry of articles and television news programs seemingly seeking to reinforce that reputation - regardless of whether it's deserved - certainly can't help the Holy See's bid.

All of which explains why the Vatican has been aggressively shooting down the reports with an unprecedented array of detailed, line-by-line refutations and sarcastic jabs at the journalists reporting them in a bid to set the record straight.

Almost lost in the shuffle is that the Vatican in recent weeks has done more to come into compliance with international financial norms than perhaps at any time in its history. It has ratified three major U.N. conventions, rewritten its law on money laundering and, separately, scored a legal victory in the U.S. concerning its embattled bank, the Institute for Religious Works or IOR.

The most explosive story to hit newsstands came on Friday: reports that the Vatican had received a confidential letter last month from a top Vatican official describing how an Italian cardinal visiting China had spoken about a presumed plot to kill Benedict this year. The document also said the pontiff was grooming Milan's archbishop as his successor.

The Vatican spokesman, the Rev. Federico Lombardi, dismissed that report as "so completely beyond reality and hardly serious that I don't even want to consider it."

But Lombardi has taken the other reports alleging financial mismanagement far more seriously, warning of possible legal action against the media outlets responsible.

Veteran Vatican correspondent Andrea Tornielli said the reports showed a clear power struggle is under way inside the Vatican, "the outcome of which is uncertain yet devastating," concerning both the fate of the pope's deputy, Secretary of State Cardinal Tarcisio Bertone, and any future conclave to elect the next pope.

Another Vatican commentator who has been highly critical of Bertone's leadership, Sandro Magister, put it this way in a recent column: "The secretary of state is increasingly alone, in a curia he does not govern and with a pope he does not help."

The question that has yet to be answered is why the reports are coming out now, and whether they are more related to internal power struggles over Bertone's leadership or external tensions between the Bank of Italy and Italian prosecutors on the one hand, and the IOR on the other. As the financial institution of a sovereign city state, the Vatican's IOR is outside the Italian central bank's regulatory grasp.

Some of the leaked documents have carried the processing stamp of the Vatican secretariat of state, implying an internal leak. Other reports have been based on information from Rome judicial authorities. Regardless, however, none of them appear to be so grave as to cause significant harm to the Holy See, particularly given that the Vatican has taken a remarkable steps in the past year to be more transparent in its financial dealings and cooperative with international requests for financial data.

The media campaign kicked off last month with the publication on television news program "The Untouchables" of leaked letters from the former No. 2 in the Vatican city state administration, Archbishop Carlo Maria Vigano, to Benedict and Bertone in 2011. In one, Vigano begged not to be transferred after exposing what he said was corruption in the awarding of Vatican contracts.

Vigano was subsequently named the Vatican's ambassador to Washington - a high-ranking post that was perhaps better suited to his diplomatic background but that nevertheless sealed the impression that he had been punished for stepping on too many toes in his cost-cutting efforts.

Lombardi initially issued a lengthy statement lamenting the leak but insisting that Vigano enjoyed the "undoubtable esteem and trust of the pope." A week later, Vigano's now-retired boss and the three current top officials of the Vatican city state changed course, saying Vigano's assertions were the baseless "fruit of erroneous evaluations."

Lombardi subsequently shot down an article in the leading newspaper Corriere della Sera suggesting that a monsignor with links to the Vatican's Congregation for the Causes of Saints had lost euro1.6 million by investing with a Bernard Madoff-like schemer.

Corriere identified the source of that story as Luca Tescaroli, the Rome prosecutor who has pursued a 30-year-old case concerning the worst scandal at the IOR: the death of Roberto Calvi, the Catholic banker who helped managed the Vatican's investments and was found hanging from London's Blackfriars Bridge in 1982.

Calvi headed the Banco Ambrosiano, which collapsed in 1982 after the disappearance of $1.3 billion in loans made to dummy companies in Latin America. The Vatican had provided letters of credit for the loans.

Calvi was found hanging a short time later, his pockets loaded with bricks and cash. After an initial ruling of suicide, murder charges were filed against five people, including a major Mafia figure, but all were acquitted.

While denying wrongdoing, the Vatican Bank paid $250 million to Ambrosiano's creditors.

The case remains unresolved, but Tescaroli has recently revived judicial requests to the Vatican for information about it - information the Vatican insists it has provided.

Tescaroli was the featured guest this week on "The Untouchables," which has been on a campaign of sorts against the IOR. It is hosted by Gianluigi Nuzzi, author of the 2009 book Vatican SpA about the IOR scandals that was based on a trove of leaked Vatican documents.

Separately, the IOR's president and director general remain under investigation by Rome prosecutors who allege they broke Italian law in 2010 by trying to transfer money from two IOR accounts without identifying the sender or recipient. The Vatican says the matter was the result of a misunderstanding.

Almost lost in all the noise was a victory that the Holy See scored for the IOR in the United States on Feb. 1: A federal judge in Mississippi dismissed with prejudice a fraud and racketeering lawsuit against the Holy See filed in 2002 by the insurance commissioners of five southern states alleging Vatican involvement in jailed financier Martin Frankel's scheme to buy and loot insurance companies of some $200 million.

The Vatican's lawyer called for the media to report on the "undignified" demise of the case and not just on claims of corruption.

"That inflammatory allegations against the Holy See and the IOR are easily disseminated and make good fodder for conspiracy theorists cannot be doubted," the lawyer said in a statement.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.